The Market Today:
The NDX (and therefore the Qs) formed a “hanging man” candle today. A “classic” hanging man’s high marks the top of an uptrend. Today’s didn’t, but I look at it this way: the market gapped up on the open, then the selling set in and took it way down before it rallied back up to close above the open. So today was the highest close in the uptrend, at least. Ergo, hangie manie.
What to do? Well, for sure, don’t try to predict the future. Ever. Review your stops, make sure they’re at a point where you’d be comfortable being taken out. Watch for a confirmation of the hanging man. Confirmation would be a gap open below today’s open (i.e. below the “real body” of today’s candle) if you’re aggressive– that would be a nice daytrade setup to watch for a Dummy Spot short entry. If you’re less aggressive, confirmation would be a close below today’s low. Remember, though, this is still an overall uptrend, so shorting on a swing trade (daily-bar) timeframe would be very dangerous. Better to use a confirmation as an opportunity to take some of those massive profits where you’ve been long for the last three weeks.
I’ve been trying to keep these continuing trades over in the sidebar so I don’t put you to sleep with so much hot air. Latest JOYG trade still here in “the middle of the page” for now, as it’s late and I’m really tired.
I feel like this trade is winding down. Joy Global broke upwards beautifully, and I happened to be standing by the tracks when the train pulled away. Now, short of a “geopolitical event,” we’re due to roll over and head back for that second bottom. I’m not calling a top and jumping out because… well, you know because why. But I am moving my stop up nice and tight, under today’s low of 36.19.
As if I needed any more spotlights and bullhorns screaming SETUP!! on Newmont Mining. You know from yesterday about the high-volume hammer. Now what did today do? We all know and love the nr7 bar. Today was the narrowest range since 11/25/05, so I’m pronouncing it an “nr200“.
As always, watch for the break, grasshoppa, watch for the break.
How about one more setup before bedtime? (Sorry for no Dummy Spot daytrades, I’ve kinda been at work).
I had written extensively in a post last July how Canwest Petroleum (CWPC at the time, now trading under its new purty Amex ticker of BQI) had diverged with the oil market as it broke below 6.00. Now we’ve been trolling around between 3.50 and 4.00 for some time, and it’s formed one of those nice little break-and-pullback setups:
The entries and stops on these setups are so clear, well, a dummy could spot ‘em. Let’s watch…